text stringlengths 5 5.67k |
|---|
They may preclude deductions of taxes on net profits but not those imposed on net assets or wealth used exclusively for making profits. Ratio |
"Commercial practice and trading principles" could vary ' These terms appear to be rather vague and indefinite. Ratio |
The meanings of the relevant statutory provisions seem much more fixed and definite. Ratio |
All that the language of Sec.10(2)(xv) apparently requires, for claiming its benefit, is proof of a direct causal connection between an outgoing and the commercial purpose which necessitates it. Ratio |
Whatever "commercial practice or trading principles" may imply or import, they could not alter the meaning of statutory pro visions or travel beyond it. Ratio |
Another question which engaged my attention was whether Wealth Tax could be excluded from the purview of of Sec.10(2)(xv) simply because it was a tax on assets or "net wealth" paid by its owner so as to reduce his wealth. Ratio |
This, line of thinking, however, seemed to me to bring in, through the backdoor, the misleading test of either the capacity as owner for the possession of which or the purpose for which the wealth tax may be demanded, instead of the inevitable need and the purpose of the trader in paying the tax, as relevant matters. R... |
In Lion Brewery 's case (supra), Lord Halsbury had declared the unavoidable need to satisfy a statutory demand for the purpose of making profits as the really relevant question for consideration in such cases. Ratio |
He said, about "the purpose for which the Government have exacted the tax"; "whatever that purpose may be it is immaterial". PRE |
It may be that the purpose of the tax before us could be considered in order to determine whether its nature is such as to necessarily imply that it cannot be taken into account in calculating profits or gains of business under Sec.10 sub, section (1) & (2) of the Income tax Act. Ratio |
The nature of the Wealth Tax was examined by this Court in Union of India vs Harbhajan Singh Dhillon(1). PRE |
where the following passage was quoted from "Readings on Taxation in Developing Countries, by Bird & Oldman, dealing with the concept of Wealth tax : "The term 'net wealth tax ' is usually defined as a tax annually imposed on the net value of all assets less liabilities of particular tax payers especially individuals. ... |
(1) [1971] (2) Supreme Court Cases p. 779 @ 806. PRE |
36 This definition distinguished the net wealth tax from other types of taxation of net wealth, such as death duties and a capital levy; the former are imposed only at infrequent intervals once a generation while the latter is a one time charge, usually with the primary Purpose of redeeming a war time national debt. Ra... |
The net wealth tax is really intended to tax the annual yields of capital rather than the principal itself as do death ' duties or a capital levy, even though it is levied on the value of the principal. PRE |
Since it tax es net wealth, it also differs from Property taxes imposed on the gross value of property primarily real property in a number of countries. PRE |
The net wealth tax gives consideration to the tax payer 's taxable capacity through the deduction of all outstanding liabilities and personal exemptions as well as through other devices, while the property tax generally does not take these factors into account. PRE |
The net wealth tax is therefore deemed to be imposed on the person of the taxpayer, while the property tax often deemed to be imposed on an object the property itself". PRE |
It is, true that wealth tax is imposed on "net wealth" of assessees , as defined by Sec.2 sub section(c), who are all "persons". Ratio |
These persons are both natural and artificial. Ratio |
In the case of an artificial or juristic person like the Company before us, it seems very difficult to separate the purpose of the juristic "persona" which is certainly commercial, from the character of the "persona" itself. Ratio |
Even as regards other traders, that part of tax which falls on what is used exclusively for trade could be really ascribed only to a trading character. Ratio |
To the extent it is a tax on property used for earning profits, it must enter into a computation of profits from trading. Ratio |
On going through the provisions of Wealth Tax Act as well as the Income tax Act it was not possible for me to infer that the payment of Wealth tax must be excluded from the computation of profits under Sec.10 sub.section (1) & (2) of the Income tax Act. Ratio |
It appears to me that nothing less than express statutory provision would justify a denial of the right to a deduction which the language of Sec.10 sub.section (2) (xv) confers upon an assessee. Ratio |
On looking at the position of law in America on this subject, I find that there are statutory provisions which deny deductions of certain taxes only, such as income tax, and taxes on war profits and excess profits, gifts, inheritance, legacies, and succession (See U.S. Code 1958, ed.Titles 22 26 "Internal Revenue Code"... |
A general statement of the law on this subject there is that it 37 "does not prevent (a) a deduction therefor under Sec.23(a) provided it represents an ordinary and necessary expense paid or incurred during the taxable year, by a corporation or an individual in carrying on any trade or business, or, in the case of an i... |
(See Jacob Mer tens Law of Federal Income Taxation: Vol 5, 1954 Cumulative Pock et Supplement, Chapter 27, paragraph 27.01). Ratio |
Learned Counsel for the Department relied upon the diffi culty in separating that Dart of the tax which is levied on any part of the net wealth, used wholly and exclusively for trade,, from the rest of it. ARG |
We arc, strictly speaking, concerned only with the correct interpretation of Sec.10 sub section (2) (xv) of the Act and with the definition of "net wealth" given in Sec. 2(m) of the Wealth Tax Act on which incidence of the tax levied under Sec.3 falls. Ratio |
In order to determine whether, as a matter of principle, a tax so defined and imposed would be covered by Sec.10 sub.s.(2)(xv) of the relevant Income tax Act, the difficulty which may arise in actually computing the deductible amount does not seem ,to be a material consideration. Ratio |
Moreover, the fact that "net wealth" is an amount by which an aggregation of all the assets exceeds all the debts does not seem to impose any intractable difficulty in the way of calculating what part of the net wealth is used for trade or business of an assessee and what is not. Ratio |
An aggregation means a collection of items added up which can be separated and not a mixture the ingredients of which become inseparable. Ratio |
Assuming, however, that there is some difficulty in separating that part of the tax which is payable in respect of net ,wealth used only for trade from that part of it which is imposed on a portion of net wealth not so used, I fail to see how the principle involved or meaning of the relevant provisions, with which we a... |
Mr. Chagla, appearing for an assessee, drew our attention to the division into two heads, one of business assets and another of the "other assets", which is found in form 'A ' prescribed by the rules for the Wealth Tax return. ARG |
This means that the Wealth Tax Act itself makes that part of the net wealth separable which can be utilised wholly and exclusively for trade from the remainder of it. Ratio |
If this can be, done, it is difficult to see how that part of Wealth Tax could escape 38 deduction, under Sec.10(2) (xv) of the Income tax Act, which is attributable to such portion of the net wealth as is used wholly and, exclusively for earning profits. Ratio |
To lay down, as we are doing in this case, that it is the causal connection between payment of tax and that part of net wealth which is used wholly and exclusively for trade and not the mere character or capacity for the possession of which the tax is demanded, which determines whether it is an allowable deduction or n... |
10(2)(xv) of the Act, seems to me to amount to nothing more than to give effect to the plain and literal meaning of a provision of a taxing statute. Ratio |
There seems no need in such a clear case, to invoke the aid of the well established cannon of construction that, where a taxing provision is reasonably capable of two equally possible constructions, the one which favours the assessee must be preferred. Ratio |
of course, the burden of proving whether the whole or a part of the Wealth tax paid by an assessee is attributable wholly and exclusively to the carrying on of a trade, and, therefore, is an allowable deduction, must rest upon the assessee in each case. Ratio |
The argument on behalf of the assessees, as I understand it, goes no further. Ratio |
One of the tests laid down in Keshav Mills Company 's case (Supra) for deciding whether a previous erroneous view should be set right by this Court, was whether any possible advantage to the public resulting from doing so would be outweighed by the mischief or harm a revision may cause. Ratio |
of course, the ultimate determination of what public good requires the law to be must take place elsewhere But, in deciding whether a previous interpretation of the law, as it exists, by this Court, even if it be erroneous in some respe ct , needs revision by it, a consideration of what public good demands undoubtedly ... |
It seems to me that the Wealth Tax Act was not intended to strike at or check expansion of commercial activites by either individuals or companies. Ratio |
Its underlying purpose was the removal of disparities of individual or personal wealth and not injury to trade. Ratio |
It could be said to be a tax aimed at individuals whose wealth exceeds certain limits. Ratio |
In so far as Ole particular interpretation which we are abandoning, because of the infirmities found in it, seemed to penalise mere expansion of business and 39 trade 'without serving the assumed underlying purpose of Wealthtax, a revision of opinion does not appear to involve any such mischief or injury to the public ... |
I have, therefore, no hesitation left in my mind in holding that the view expressed by this Court in Travancore Titanium case (Supra) must be modified as indicated by My lord the Chief Justice. Ratio |
V.P.S. Appeal allowed. RPC |
Appeal No. 1330 of 1973 Appeal by special leave from the Judgment and Order dated the 22nd January, 1973 of the Delhi High Court in I. A. No. 1854 of 1972 in Suit No. 485 (A) of 1972 and Civil Appeals Nos. 1224 & 1225 of 1973. FAC |
Appeals by special leave from the Judgment and Order dated the 15th November, 1972 of the Delhi High Court in I. A. Nos. 846 and 119 of 1972 in Suit No. 158 of 1971. FAC |
L. N. Sinha, Solicitor General of India Shyamala pappu & section P. Nayar for the appellant (in all the appeals) D. G. Singhania, M. K. Garg and Shiv Khurana for respon dent (in C. A. 1330) D. D. Sharma for respondent (in C.A.s. 1224 1225) The Judgment of the Court was delivered by BHAGWATI, J. FAC |
These appeals, raise an interesting question relating to the interpretation of cl. 18 of the General Conditions of Contract contained in the Standard Form of Contract No. D.G.S. & D. 68. Ratio |
That is the standard form in which contracts are entered into by the Central Purchase Organisation of the Government of India for purchase of stores from third parties described as 'contractors and the question of interpretation which arises for determination is, therefore, one of some importance, affecting as it does ... |
The facts giving rise to these appeals follow a common pattern and it would, therefore, be sufficient if we set out the 559 facts relating to civil appeals Nos. 1221 and 1225 of 1973. FAC |
They bring out clearly the point which arises for consideration in all the three appeals. FAC |
The respondent tendered for supply of certain quantity of foam compound to the appellant and its tender was accepted by the appellant by acceptance of Tender dated 16th July, 1968. FAC |
The Acceptance of Tender was subject to the General Conditions of Contract contained in the Standard Form of Contract No. D.G.S. & D. 68. FAC |
The only clauses of the General Conditions of Contract which are material for our purpose are cls.18 and 24 and they read as follows: "18. RECOVERY OF SUMS DUE Whenever any claim for the payment of a sum of money arises out of or under the contrat against the contractor, the purchaser shall be entitled to recover such ... |
In the event of the security being insufficient, the balance and if no security has been taken from the contractor, the entire sum recoverable shall be recovered by appropriating any sum then due or which at any time thereafter may become due to the contractor under the contract or any other contract with the purchaser... |
"24. ARBITRATION In the event of any question, dispute,or difference arising under these conditions or any special conditions of contract, or in connection with this contract, (except as to any matters the decision of which is specialty provided for by these or the special conditions) the same shall be referred to the ... |
It will be no objection that the arbitrator is a Government Servant, that he had to deal with the matters to which the contract relates or that in the course of his duties as a Government servant he has expressed views on all or any of the matters in dispute or difference. Ratio |
The award of the arbitrator shall be final and binding on the parties to this contract. FAC |
Work under the contract shag, if reasonably possible, continue ' during the arbitration proceedings and no payment due to or payable by the purchaser shall be withheld on account of such proceedings. FAC |
560 The performance of this contract ran into difficulties and a dispute arose between the parties giving rise to claims by either party against the other. FAC |
The respondent contended that the appellant had committed a breach of the contract and was, therefore, liable to pay to the respondent a sum of Rs. 2,35,800/ by way of damages. FAC |
suffered by the respondent by reason of the breach of the contract. FAC |
The appellant, on the other hand, said that it was the respondent who had committed the breach, of the contract and was liable to pay to the appellant by way of damages a sum of Rs. 2.28,900/ under clause 14 of the General Conditions of Contract. FAC |
The Assistant Director of Supplies by his letter dated 30th March, 1971 called upon the respondent to make payment of the amount of Rs. 2,28,900/and intimated that if the respondent failed to do so on or before 30th April, 1971, the Pay and Accounts Officer, New Delhi/Madras would be authorised to recover the, same fro... |
This dispute between the parties being a dispute arising out of the contract was liable to be settled by arbitration under cl. 24 of the General Conditions of Contract and the respondent, therefore, filed an application in the Delhi High Court under section 20 of the Indian for filing the Arbitration Agreement containe... |
The respondent also, at the same time, made an application to the Delhi High Court for an interim injunction restraining the appellant from recovering the amount of damages claimed by it from the pending bills of the respondent. FAC |
This application was, however, rejected by the Delhi High Court on the ground that it was not shown that there were any pending bills of the respondent at that time out of which the threatened recovery could be made by the appellant. FAC |
The application under section 20 of the Indian was thereafter heard by the Delhi High Court and by an order dated 5th May, 1972 the Delhi High Court allowed that application and ordered the arbitration agreement contained in cl. 24 to be filed and made an order of reference to arbitration in accordance with the arbitra... |
The claim of the respondent against the appellant for Rs. 2,35,800/ and the counter claim of the appellant against the respondent for Rs. 2,28,900/ thus became the subject matter of reference tO arbitration. FAC |
During the pendency of the arbitration some amounts became due and payable by the appellant to the respondent in respect of other contracts entered into between the parties. FAC |
In view of the letter dated 30th March, 1971 the respondent apprehended that the appellant would appropriate these amounts towards recovery of the amounts of damages claimed by it even though the claim for damages was disputed by the respondent and was pending adjudication before the arbitrator. FAC |
The respondent, therefore, made interim Application No. 119 of 1972 to the Delhi High Court on 17th January, 1972 under section 41 read with the Second Schedule to the Indian praying that the status quo should be maintained and the appellant should be restrained from recovering its claim for damages from the amounts du... |
How it appears that this Interim Application No. 119 of 1972 was made in the Original Application under section 20 of the Indian , 561 1940 and the appellant, therefore, raised a technical objection that the Original Application under section 20 having been disposed of, Interim Application No. 119 of 1972, as filed, co... |
The respondent, in view of this technical objection raised on behalf of the appellant, filed another Interim Application No. 746 of 1972 as an independent application under section 41 read with the Second Schedule to the Indian on 16th May, 1972 praying for the same interim relief as was claimed in the earlier Interim ... |
Both these interim applications were resisted by the appellant relying on cl. 18 of the General Conditions of Contract but Mr. Justice Avadh Bihari of the Delhi High Court, who heard these interim application, took the view that cl. 18 did not authorise the appellant to appropriate. FAC |
the amounts of any pending bills of the respondent towards satisfaction of its claim for damages against the respondent, unless such claim for damages was either admitted by the respondent or adjudicated upon by arbitration or suit in civil court. FAC |
The learned Judge accordingly by an order dated 15th November, 1972 allowed both the interim applications and issued an interim injunction restraining the appellant "from effecting recovery of the amounts claimed to be due from the other pending bills" of the respondent. FAC |
The appellant thereupon, with certificates obtained from the Delhi High Court, preferred Civil Appeals Nos. 1224 and 1225 of 1973 in this Court. FAC |
One appeal was directed against ' the impugned order in so far it related to Interim Application No. 119 of 1972 and the other in so far as it related to Interim Application No. 846 of 1972. FAC |
The appellant also preferred Civil Appeal No. 1330 of 1973 against a similar order passed by the learned Judge in Interim Application No. 854 of 1972 in the other case. FAC |
There are in the main two grounds on which the learned Solicitor General, appearing on behalf of the appellant, challenged the order of Interim injunction made by Mr. Justice Avadh Bihari A.The impugned order amounted in effect and substance to an order directing the appellant to pay the amounts of the pending bills of... |
, the learned Judge had no jurisdiction under section 41 read with the Second Schedule to make such an order and the impugned order was, therefore, outside the scope of his power and hence invalid. ARG |
, B.Clause 18 comes into play when there is a claim for payment of a sum of money arising out of or under the contract. ARG |
It is not necessary that the sum of money must be due and payable to the purchaser. ARG |
It is enough if there is a claim even for damages. ARG |
Whenever, there is such claim, the purchaser is given a right under cl. 18 to recover it by appropriating "any sum then due or which at any time thereafter 562 may become due to the contractor under the contract" or under any other contract. ARG |
The appellant was, therefore, en titled to recover the amount of its claim for damages against the respondent by appropriating the sums which subsequently became due to the respondent under other contracts, even though the claim for damages was contested by the respondent and was pending adjudication before the arbitra... |
No interim injunction could be granted to prevent the exercise of such right. ARG |
If interim injunction were to be granted in a case of this kind as of course merely on the ground, without anything more, that the claim for damages is pending adjudication and until it is determined in favour of the purchaser, ' it should not be allowed to be recovered by the purchaser out of other sums due to the con... |
18 meaningless and ineffectual and the tight to the purchaser under that clause would become illusory. ARG |
of course, it would be open to the court even in such a case to grant interim injunction, if it is satisfied that the claim for damages is prima facie not well founded and the balance of convenience requires that, Pending adjudication, the purchaser should be restrained from effecting recovery of the claim for damages ... |
But here admittedly neither of these two factors was taken into consideration by the learned Judges and the order of interim injunction made by ' him cannot, therefore, be sustained. Ratio |
We shall proceed to examine these grounds in the order in which we have set them out. Ratio |
Re: Ground A. Ratio |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.